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“Agreement in principle” – is it binding?

By Andrew Behman, an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

When you’re negotiating the terms of a contract, settlement or payment arrangement, you might hear the term “agreement in principle”.  The obvious questions are:

  1. What does it mean?
  2. If you agree “in principle” to a person’s offer, or that person agrees “in principle” to your offer, can the agreement be enforced?

These are questions that are considered in numerous cases and various situations. The Courts have historically considered such cases in the context of different categories of agreement based on the decision in Masters v. Cameron. Recently the Supreme Court of New South Wales looked at these questions again in the matter of P J Leahy & Ors v A R Hill & Anor [2018] NSWSC 6. In this matter, Mr Leahy (and his related parties) commenced proceedings against Mr and Mrs Hill to recover an amount he claimed was due for repairs to a shed and arrears under a licence agreement. [...]  READ MORE →

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DEBT COLLECTION BY THE MERE FACT …

Debt collection commentary by Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.

Following on from our article on the Safe Harbour provisions recently introduced, Credit Managers should be also be aware of the proposed additions to the Corporations Act 2001 (“the Act”) that attempt to create a further reforms for companies in financial stress.

The reforms are known as the “ipso facto” provisions. Don’t let the Latin term confuse you as it simply means “by the mere fact”. [...]  READ MORE →

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CREDITORS AND THE INSOLVENCY LAW REFORM ACT 2016

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.

As the 2017 year draws to a close, creditors would be aware that both instalments of the Insolvency Law Reform Act 2016 (“the ILRA”) have come to pass.

What should creditors be aware of under the new regime?

The ILRA is an attempt to reform the insolvency law but also to provide an improvement in the confidence of the public in the overall performance of the trustees and liquidators appointed to the various estates and administrations that are commenced every day. [...]  READ MORE →

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Signing on the dotted line: making sure you bind your customer to a contract.

By Jeff Brown, a Principal of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

We all know the importance of getting a customer “signed up”. But how do you know that the person signing a supply agreement on behalf of a potential customer has authority to do so, and does it even matter if that person does not have authority?

This issue commonly arises when we advise clients on credit collection policies and when we work with sales teams on how to cut down on errors at the point where a sales lead becomes a customer. These errors can have catastrophic effects when seeking to chase a customer who has become a bad debt. [...]  READ MORE →

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Guaranteed Win?

By Bonnie McMahon Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

Guarantees are a vital part of any credit agreement, however enforcing them is often a major headache for creditors, especially when collecting money. It is often the case that guarantors will argue that a guarantee is invalid or was never incorporated into the credit agreement: see Singh v De Castro; Dhaliwal v De Castro; Brar v De Castro [2017] NSWCA 241 (“Singh”).

So how can debt collectors avoid guarantors trying to get around a guarantee when they are trying to recover a debt? The simple answer is by foreseeing the issues which may arise in respect of a guarantee and eliminating them now. [...]  READ MORE →

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Collecting Money: Which Court?

By Bonnie McMahon Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

When commencing debt recovery proceedings against a debtor, it is important to ensure that you are commencing proceedings in the right court. –

Collecting money under $10,000 – Debt collection proceedings to recover a debt under $10,000 should be commenced in the Small Claims Division of the Local Court of NSW.

Collecting money under $100,000 – Debt collection proceedings to recover a debt under $100,000 should be commenced in the General Division of the Local Court of NSW. However, there are circumstances where a debt up to $120,000 can be heard by the Local Court, although you will normally need the consent of the debtor. [...]  READ MORE →

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Recovering money from the right debtor

By Hayley Hitch, a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

One of the biggest mistakes companies or individuals make when attempting to recover a debt is going after the wrong debtor. Although a credit application has been completed in its entirety that does not mean the credit application is enforceable or even contains the correct information in order to recover a debt from a customer.

To ensure that you are seeking payment from the correct customer, debt collection processes should be put in place to protect your entity from providing goods to customers who will inevitably default in payment and be unable to recover payment for such goods. [...]  READ MORE →

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When is a letter Delivered?

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

A letter can be posted today and yet be received by the recipient on any number of days thereafter due to various issues that impact on the process between sender and recipient. The Government has attempted to regulate a standard time frame for receipt by various statutory measures to assist to work out the delivery time … but has it?

The need in legal circles to be precise about the date of receipt of a letter became instantly necessary when the High Court of Australia in David Grant and Co Pty Ltd v Westpac Banking Corporation [1995] 184 CLR 265 held unanimously that the time limit of 21 days after service set for the setting aside of a Creditor’s Statutory Demand (“Demand”) was 21 days, a number not to be fudged by any external factors. [...]  READ MORE →

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DEBT RECOVERY – BANKRUPTCY ENFORCEMENT

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.

Obtaining a judgment from the Court is the first step in the debt collection process.  Enforcement is the next step but which option is going to recover that debt.

One option is to proceed with an application to have the individual declared bankrupt.  In an effort to avoid bankruptcy, the individual will have to pay the judgment debt or make other arrangements satisfactory to the creditor. [...]  READ MORE →

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DEBT RECOVERY – ENFORCEMENT BY WINDING UP

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.

A debt is due to you by a company and your internal debt recovery methods have failed as they won’t pay!!  What’s next for you to collect those unpaid invoices?

The Corporations Act 2001 (“the Act”) provides for a company owing money to be wound up and a liquidator appointed to recover the assets of the company and distribute them to all creditors of the company.  The winding up process is a strong debt collection tool for unpaid creditors. [...]  READ MORE →

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Serve by Post at your Peril!

A recent Federal Circuit Court decision has reinforced that the Court will hold any creditor who seeks to serve a bankruptcy notice on a debtor by post to an extraordinarily high standard of proof.

Mr Kenyon was made bankrupt on 16 January 2017 on the application of Lavan Legal. Mr Kenyon sought to have the creditor’s petition, and his bankruptcy, set aside on a number of grounds. One of those grounds was that Lavan could not rely upon Kenyon’s failure to comply with the bankruptcy notice issued by Lavan because it had not been properly served on him. [...]  READ MORE →

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Garnishee Orders for Debt Recovery

By Renee Smith a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

So you have been successful in receiving a default judgment in relation to the Judgment Debtor. So how do you go about enforcing that judgment debt and collecting the money owed?

One option is to apply to the Court for a garnishee order.  A garnishee order is an order by a court which directs payment of the judgment debt from any of the following:

  • The debtor’s wages – usually taken in instalments payable by the judgment debtor’s employer;
  • The debtor’s bank account/s (usually collected in a lump sum or instalments); or
  • People who owe money to the debtor (usually collected in lump sums unless arrangements are made otherwise).

Failure to comply with a garnishee order can be a contempt of the court, and as the debts are payable by a third party, garnishee orders can be a great advantage to creditors in debt recovery. One disadvantage to the use of garnishee orders can be not knowing what assets may be available to be the subject of a Garnishee order. However in the right matter, garnishee orders can be extremely effective as a debt recovery tool. . [...]  READ MORE →